Cineworld strikes deal to exit Chapter 11, shares tumble

(Sharecast News) - Embattled cinema chain Cineworld Group said on Monday that it has struck a deal with lenders as it looks to exit Chapter 11 bankruptcy protection.

The group, which filed for Chapter 11 last September, said it had entered into a conditional restructuring support agreement and a conditional backstop commitment agreement with lenders controlling around 83% of the group's loans due 2025 and 2026, and a revolving credit facility due 2023.

Should the plan go ahead, it will reduce indebtedness by around $4.53bn, raise $800m in aggregate gross proceeds and provide $1.46bn in new debt financing, net of the original issue discount.

The plan will not, however, provide any recovery for holders of Cineworld's existing equity interests, and shares in the London-listed firm plunged. By 0830 BST, the stock - which has lost 94% of its value over the last year - was down 21% at 2.3p.

London-listed Cineworld, which operates from 747 sites in 10 countries including the US and UK, filed for bankruptcy protection in September. The chain, which also owns Picturehouse in the UK and is one of the world's biggest cinema operators, was rocked by the pandemic and a lack of blockbuster releases, and debt levels hit $5bn.

Cineworld said it expected to emerge from Chapter 11 during the first half of this year, although potential disposals could delay that timetable. Earlier this year, Cineworld confirmed it had received non-binding proposals for some or all of the group's assets. Since then, it has opted not to sell any assets in the US, UK or Ireland, but continues to consider potential offers for its businesses elsewhere in the world.

Mooky Greidinger, chief executive, said: "This agreement with our lenders represents a vote of confidence in our business, and significantly advances Cineworld towards its long term strategy in a challenging entertainment environment.

"With a growing slate of blockbusters and audiences returning to cinemas in increasing numbers, Cineworld is poised to maintain its position as the best place to watch a movie."

Cineworld's cinemas have all been operating as usual during the Chapter 11 process. The proposed restructuring remains subject to a number of conditions, including the approval of all creditors and the US bankruptcy court for the Southern District of Texas.